Q: What is the difference in the local foreclosure scene right now compared with this time last year?
A: The difference now is that we're getting more high-end foreclosures. Last year, the top end of the market was in the $400,000 range. This year, we're seeing stuff up into the $800,000 range; the higher-priced houses are entering the market now.
Q: What has been the prime mover in the change?
A: Generally, (people) on the low end of the market have the smallest reserves, and now the high-end people have run out of reserves. They've run out of retirement money with their 401(k)s losing value. Instead of people losing jobs, now the businesses are closing, and business owners are typically high-end earners, as well. It's one thing to lose a job; it's another when a business actually closes.
Q: Is there a demographic difference in who is going into default now than in the past three years?
A: The demographic change is the addition to entry-level homes; it's the higher end. There are a whole lot of homes going into foreclosure out around the Eagle Point golf course and east Medford; that wasn't going on before. The people who can buy those places are getting tremendous values. Banks are not interested in inventory and drop the price down until someone in the market is willing to bite on it.
Q: Are homeowners more willing to fight for their houses and more conversant with how to save them at this point?
A: Really, the key in this thing is education, and the public is becoming more educated. A good real-estate agent will help someone avoid foreclosure through the short-sale process. There are several things playing into that. Agents are more educated, we're getting more experienced and the public has more understanding about the process. Now the banks are getting on board and getting websites up to follow the process. Los Angeles-based Equator Financial Solutions has the major site where documentation can be run through it. Now there is a more uniform way of dealing with short sales than in the past.
Q: What changes, if any, are you seeing on the lenders' side of the equation?
A: They are getting tools, No. 1. And No. 2, they can demand until the cows come home, but it's not going to work if the seller can't perform what their demands are. Going through a short sale, the lender will say the price doesn't work, but if the seller had cash in the first place, they wouldn't be in the situation. They can demand more money from the buyer, but if the buyer doesn't have it, the bank is going to end up with the house. We're getting about a third more successful short sales than we were a year ago.
They found out in the long run it is cheaper to take less on a short sale than to foreclose, with attorney fees, holding costs, damage to the house and marketing costs. They have so much inventory they don't want the house; they would rather we sell it first.
Q: Is there a phase of the process that people have a harder time mastering than others?
A: The hardest thing for people to understand is that doing a short sale is the same as getting a loan. The lender wants to see financials, tax returns and bank statements to make sure you are not defrauding them, and that there is really a distress. If you can't prove a distress, there will be no short sale. Distress can be as simple as having moved, your job is 300 miles away, you are upside-down in your house and you've got to sell.
Q: What is the quickest or simplest way to stave off foreclosure once you are in default?
A: To get your house on the market with an agent certified to deal with distressed houses and the experience in handling the situation to get it sold prior to foreclosure. A short sale goes on your credit history for about three years, and a foreclosure is on there for seven.
Reach Mail Tribune business editor Greg Stiles at 541-776-4463 or e-mail firstname.lastname@example.org.